This tremendous heterogeneity should give pause to those advocating a one-size-fits-all policy to “fix” the housing problem, as it would be unlikely to match the real conditions on the ground in many markets. Indeed, not all of the housing problems are the same. The delinquency and foreclosure problems that emanated from the bubble and crash in Nevada, Arizona, and elsewhere look little like the distress in Ohio, which never experienced a house-value bubble.

The problem, in Ohio was a poor economy. And the solution is better economic growth. Indeed, the best solution for housing remains to improve the overall economic growth in the economy. This is a direct remedy for the problems in places like Ohio, and the best hope elsewhere to turn the millions of new households into participants in the housing market.

There is also a political-economy reason that growth is the key. With stronger growth will come stronger housing markets. And until the markets strengthen, the federal government will remain the dominant force in housing finance. This very dominance raises the potential costs of a policy error and, as a result, makes it less likely that Congress will move ahead with much-needed reforms to Fannie Mae, Freddie Mac, the FHA, and others.

When Congress does move to reforms, it should keep three lessons of the recent crisis in mind. First, one size really does not fit all. Cleveland is not Las Vegas, and vice versa. Flexible policy schemes will be more successful in the future.

Second, a reliance on private capital is the key, and the top priority should be to restore the dominant role of private capital in housing finance. I, however, believe that should another housing bust occur in the future it is unlikely that a future Congress will be disciplined enough to let market forces play out. Instead, Congress will intervene in some way to attempt to cushion the fall.

That means there will be a government backstop for housing whether one likes it or not. If so, doesn’t it make sense to design one in advance, develop an effective way to price it, and ensure to the greatest degree possible that taxpayers are insulated from the cost of the intervention?

Finally, Congress should remember that not every family belongs in a detached, single-family home with a white picket fence. Multi-family and rental housing are natural parts of a vibrant housing market and deserve equal attention and consideration in the design of federal housing and housing finance policies.

Housing markets remain weak across the country, but not uniformly so. Stronger growth is key to a more widespread housing recovery and will set the stage for federal housing reforms.